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Alpha Natural Resources Inc (NYSE:ANR)
Beneish M-Score
-1.06 (As of Today)

Warning Sign:

Beneish M-Score -1.06 higher than -2.22, which implies that it might have manipulated its financial results.

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Alpha Natural Resources Inc has a M-score of -1.06 signals that the company is a manipulator.

ANR' s 10-Year Beneish M-Score Range
Min: -4.15   Max: -0.58
Current: -1.06

-4.15
-0.58

During the past 13 years, the highest Beneish M-Score of Alpha Natural Resources Inc was -0.58. The lowest was -4.15. And the median was -2.92.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Alpha Natural Resources Inc for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 1.2354+0.528 * 4.851+0.404 * 0.91+0.892 * 0.7424+0.115 * 1.0256
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1194+4.679 * -0.1081-0.327 * 1.1094
=-1.06

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $369 Mil.
Revenue was 1111.773 + 1093.7 + 1191.094 + 1335.123 = $4,732 Mil.
Gross Profit was 65.793 + 75.75 + -54.53 + 70.629 = $158 Mil.
Total Current Assets was $2,038 Mil.
Total Assets was $11,834 Mil.
Property, Plant and Equipment(Net PPE) was $8,777 Mil.
Depreciation, Depletion and Amortization(DDA) was $898 Mil.
Selling, General & Admin. Expense(SGA) was $157 Mil.
Total Current Liabilities was $1,290 Mil.
Long-Term Debt was $3,366 Mil.
Net Income was -55.698 + -358.788 + -458.241 + -185.681 = $-1,058 Mil.
Non Operating Income was 249.683 + -8.063 + 7.435 + -18.272 = $231 Mil.
Cash Flow from Operations was -53.961 + -69.561 + 111.083 + 2.098 = $-10 Mil.
Accounts Receivable was $402 Mil.
Revenue was 1333.591 + 1558.353 + 1633.809 + 1848.109 = $6,374 Mil.
Gross Profit was 157.584 + 467.792 + 206.828 + 197.914 = $1,030 Mil.
Total Current Assets was $2,170 Mil.
Total Assets was $12,847 Mil.
Property, Plant and Equipment(Net PPE) was $9,462 Mil.
Depreciation, Depletion and Amortization(DDA) was $996 Mil.
Selling, General & Admin. Expense(SGA) was $188 Mil.
Total Current Liabilities was $1,280 Mil.
Long-Term Debt was $3,277 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(368.898 / 4731.69) / (402.249 / 6373.862)
=0.07796326 / 0.06310915
=1.2354

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(75.75 / 6373.862) / (65.793 / 4731.69)
=0.16161599 / 0.03331621
=4.851

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (2038.041 + 8776.743) / 11833.703) / (1 - (2170.015 + 9461.916) / 12847.484)
=0.08610314 / 0.09461409
=0.91

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=4731.69 / 6373.862
=0.7424

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(995.697 / (995.697 + 9461.916)) / (898.182 / (898.182 + 8776.743))
=0.09521265 / 0.09283607
=1.0256

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(156.558 / 4731.69) / (188.403 / 6373.862)
=0.03308712 / 0.02955869
=1.1194

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((3366.178 + 1290.341) / 11833.703) / ((3277.03 + 1280.087) / 12847.484)
=0.39349636 / 0.35470891
=1.1094

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-1058.408 - 230.783 - -10.341) / 11833.703
=-0.1081

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Alpha Natural Resources Inc has a M-score of -1.06 signals that the company is likely to be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Alpha Natural Resources Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.25230.97280.83290.97851.40610.76991.25850.66380.9686
GMI 0.57461.18271.01671.26430.6891.13531.41421.03093.3113
AQI 11.5980.93940.93520.40370.8970.72731.3370.47680.8547
SGI 1.32271.11651.01321.65731.01081.56971.81450.98130.7102
DEPI 00.85150.93210.69352.82620.68172.83520.61431.0171
SGAI 0.73690.93891.38830.58052.3440.67661.16410.55931.0671
LVGI 0.82141.00320.98940.96440.58460.96691.26771.18441.1407
TATA -0.0475-0.0996-0.1092-0.1931-0.0578-0.1151-0.0848-0.2261-0.1022
M-score 1.86-2.80-3.22-2.87-2.46-2.73-1.46-4.09-2.14

Alpha Natural Resources Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.25850.64520.46870.38740.66381.13361.00680.91040.96861.2354
GMI 1.37841.41431.47651.35131.03090.97850.91241.1253.31134.851
AQI 1.3375.20210.16980.50750.47680.13640.98110.72390.85470.91
SGI 1.81451.91751.72791.24140.98130.80560.71810.72370.71020.7424
DEPI 2.83520.66021.84060.52250.61432.47370.95131.03241.01711.0256
SGAI 1.16410.98850.39540.44810.55930.61541.06381.1161.06711.1194
LVGI 1.26771.13371.19591.23171.18441.29391.09971.18141.14071.1094
TATA -0.0848-0.0921-0.2636-0.2716-0.2261-0.229-0.072-0.1048-0.1022-0.1081
M-score -1.48-0.58-3.50-4.15-4.09-3.82-3.17-3.42-2.14-1.06
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